The transmission system in UK is run by National Grid. In UK, the electricity and gas markets are regulated by the Gas and Electricity Markets Authority (GEMA) which del-egates its functions to the Office of Gas and Electricity Markets (Ofgem).
UK NEEAP only mentions that transmission and distribution tariffs do not prevent suppliers from improving consumer participation in achieving DR development [74].
RIIO (Revenue=Incentives+Innovation+Outputs) ED1 is Ofgem’s performance-based framework to set the electricity price controls. The RIIO model encourages net-work companies plan a long-term strategy for delivering netnet-work services to their cus-tomers. RIIO guide [145] make an approach to flexibility of network systems, including DR.
Also, Ofgem has a Third Parties Intermediaries (TPI) Programme which considers the enduring long-term regulatory framework for TPIs and consider regulatory measures to some energy retail markets covering household and business consumers.
In 2016, UK Government jointly with the National Regulatory Authority publicized a wide number of recommendations to establish DR potential, storage and other smart grid technologies so as to increase efficiency and flexibility of the electricity system. For that, the UK Government committed to allocate at least £50 million for innovation in smart systems form 2016-2021 [146].
7.3.1 Implicit DR
The UK Government is committed to ensuring that every home and small business is offered a smart meter by the end of 2020 [146]. A research on ToU tariffs in UK [147]
concludes that around 30 % of British people would change their electricity tariff to stat-ic ToU tariff.
Thanks to smart meters “world-first” ToU dynamic tariff was introduced in June 2018. Octopus Energy developed this Smart ToU tariff, called Agile Octopus [148]
which is Britain’s first half-hourly time of use tariff for households, which prices reflect the actual changes in wholesale electricity prices.
UK energy suppliers OVO, Octopus, Scottish Power, Eon, and Ecotricity have all launched tariffs designed for EV drivers. Green Energy became the first UK energy supplier to offer a static ToU tariff in early 2017, offering its smart meter customers a much cheaper rate of electricity during weekday nights (11pm-6am).
In UK, industrial consumers forecasting of peak demand periods and their manage-ment of injection/withdrawals during the periods are very well paid. On top of that, in-dustrial and large commercial users can agree ToU or interruptible contracts with sup-pliers [149]. Likewise, the TSO, can contract directly such large users for balancing activities.
The Triade Charges allow consumers to earn off of flexibility; they can reduce their energy charges by reducing consumption over peak periods. Half-Hourly settled meters within the UK pay a levy set by the TSO based on each meter's usage during the highest three half-hour periods of demand on the transmission networks. Service pro-viders may send triad warnings to their customers about 20-30 times annually, up to one day in advance in order to warn them of a possible peak triad period. This program has also its benefit on the congestion management of the network [150].
Implicit DR in UK is high developed. Self-consumption is widely used as well as rev-enues are high. As in Spain, they have wide deployment of smartmeters but only a few varieties of tariffs are available.
7.3.2 Explicit DR
Frost & Sullivan, through its analysis [28], gathers that 80% of the customers en-gage in DR programs through an aggregator, 20% contract directly with the National Grid, and the rest 10% through their DSO .
Great Britain has started to deploy “new generation” smart meters, which are able to meet the minimum frequency target to enable consumer participation in balancing mar-kets [151]. Among the countries analysed in this thesis, Great Britain is the only country where electricity retailers are the responsible for the smart meter roll out [152].
UK was the first country in Europe to open sundry of its markets to consumer partic-ipation. Currently, aggregated load is accepted and all balancing service markets are open to DR, but there appear entry barriers in most markets. As a result, the evolution has not been as forecasted, some measurement, baseline, bidding and many other procedural and operational requirements are still inappropriate for DR growth.
Any party “supplying” electricity to a third-party consumer is required to be licensed by Ofgem. The license then places obligations on parties to accede to the relevant in-dustry codes, such as the Balancing and Settlement Code.
Nevertheless, the aggregator is not required to contact the retailer/BRP directly and ask for permission to load curtailment; this lack of clarity of relationship is an issue that is not yet resolved. Independent aggregators can directly access consumers for ancil-lary services and capacity products and may aggregate load from all over the country [5]. Aggregated DR in capacity mechanisms is allowed but the rules are very restrictive and favour generation units. Conversely, the wholesale markets remain closed to inde-pendent aggregators [5].
The consumer is contractually obliged to inform the retailer its intention to participate in the market. Rules need to be formalised and legislation introduced to allow third-party aggregation participation while protecting the retailer/BRP from sourcing losses and imbalance payments caused by a third-party aggregator. Currently, large industrial customers and retailers carry out DR with directly participation in day-ahead and intra-day markets.
Concerning BRP’s imbalances caused by load curtailment, the customer has no ob-ligation to maintain a consumption profile. Due to low affected retailers and few
partici-pation of DR, Ofgem do not consider urgent to elaborate an adjustment mechanism to control the issue.
In UK, numerous DR programs are offered by National Grid such as Short-Term Operating Reserve (STOR) and in frequency response. Also, National Grid makes rec-ommendations to organizations for market access. STOR requires 11-13 hours per day (on weekdays) participation or to choose one-time window (morning/evening), but it involves high decrement of revenues [153]. Moreover, Kiwi Power Company like in other many countries has implemented frequency response, capacity reserves pro-grammes and Network constrains management.
National Grid is based on large producers’ mandatory provision for reserves and firm frequency response (FFR) that allow them to participate in the market. The partici-pants are able to bid each month to provide different services for only one part of the day (different for weekdays, Saturdays and Sundays) without changing the amount of reserve provided.
Regarding product requirements, all products are asymmetrical with a minimum bid of 10 MW. To participate, provision of reserve with FFR must be cheaper than manda-tory provision, but as there are more than 20 parameters procurement and selection optimisation, there could be some errors. Aggregators with less volume than 10 MW can participate within FFR bridging contract which lasts one or two years with regulated remuneration and proportional to the MWs aggregated. The payment rates are not pub-lic.
To sum up, in UK all markets are not opened yet, wholesale markets remain closed.
Aggregation is allowed but ther is a lack of clarity between aggregators and retailers relationship. When accessing to opened markets, they have high minimum bid sizes requirements and need to be symmetrical. Payments are correct because are propor-tional to the MW shared.
7.3.3 UK pilots
In 2004, Flexitricity apart from provide generation (small hydro and stand-by genera-tors), it started to operate as large industrial and commercial load (more than 50kW) aggregator. It can incentivize clients for upward and downward load management and eventually trade this flexibility in markets or suppling balancing services such as STOR service [10]. Flexitricity's aggregation programs do not incur any cost; the company is responsible for installing the communication, metering, and control equipment. Fur-thermore, DR is used for triad management.
In December 2013, Demand Side Balancing Reserve (DSBR) and Supplemental Balancing Reserve (SBR) were implemented for balancing purposes. The reserves markets were carried out by National Grid with the approval of the Authority Ofgem.
DSBR participation is for voluntary large energy users who diminish their demand dur-ing winter weekday evendur-ings between 4 and 8 pm in return for a payment. SBR is closer to DR but it was seen that these services did not facilitate capacity markets. This services were removed in 2017/2018 because there were not needed, lack of market intelligence and customer’s support was seen also as an issue for its application [154].
From August 2018, exceptionally, small generators can access to the balancing market on a minute-by-minute basis thanks to Limejump service. This is an industry first made possible through a derogation issued by Ofgem. ENTSO-E projects, as TERRE, MARI and PICASSO will open up the balancing market to a wider range of flexibility providers, which should drive down costs to the end, for this reason the ser-vice was allowed by the Ofgem [155].
Six DSOs in UK have joined to Piclo Flex. The platform creates an independent marketplace which allows meeting DSOs and flexibility providers and agreeing a con-tract between them. DER can detect flexibility necessities thorough a dashboard, pre-qualify assets, and be notified from relevant auction [156]. In the pilot, participated 175 flexibility providers with a total combined capacity of 4GW contributing to the manage-ment of local grids in congested areas. In May 2019 they signed their first commercial contract with Scottish and Southern Electricity Networks (SSEN) [157].
OVO Energy and Nissan are working on a domestic vehicle-to-grid demonstrator.
The project is currently taking place and will involve 1,000 households using OVO’s grid balancing platform ‘VCharge’ to support electricity grid balancing.
In October 2017, E. ON commissioned a 10MW lithium-ion battery at a biomass combined heat and power (CHP) plant near Sheffield. The battery provides Enhanced Frequency Response to the Electricity System Operator, responding in less than one second by exporting or importing power to keep the frequency of electricity flows on the grid at an efficient and safe level [158].
Transitional Arrangements (TA) auction is a pilot which forms part of Capacity Mar-ket with the aim of encouraging DR growth [159]. The first TA secured 803 MW of ca-pacity for delivery in 2016/17, and the second and final TA secured a further 312 MW of turn-down DSR for delivery in 2017/18 [146]. The lower volume at the second auc-tion is because it was also open to back-up generaauc-tion behind the meter and to
small-scale, distribution connected generation. It is remarkable the high volume of DR in ca-pacity securing agreements in the latest four-year ahead auction is 1.4GW of DR.